Re-energizing South Africa.

• Author: Scholand, Michael

Bringing modern energy services to South Africa's deprived majority doesn't have to mean simply expanding the now obsolete coal-based system built for the nation's white minority.

Apartheid still haunts South Africa's energy economy. The country's fledgling democracy has inherited two energy systems, as different from each other as California's is from that of Bangladesh - but less efficient and more polluting than either of those. For the country's white minority, cheap electricity is available at the flip of a switch. But even though South Africa has 30 percent more generating capacity than it uses, two-thirds of its black citizens have no electricity at all. Most live in uninsulated shacks, sweating in summer, shivering in winter, and breathing unhealthy air from open cook fires year-round. Dealing with this legacy is essential for the survival of the two-year-old government headed by Nelson Mandela, the first South African president to be elected by the country's entire population. Mandela has made ambitious promises to transform the nation's energy system - providing such basic amenities as lighting and heating to millions of blacks, while reducing pollution.

But the conventional development route will never reach those goals. The country's energy system is riddled with fundamental inefficiencies; simply adding more power plants and transmission lines won't be enough to deal with the exploding demand. To keep its promises, the government will need an array of cutting-edge technologies, including low-cost, super-efficient housing for the poor, solar electric systems for rural households, and gas-fired cogeneration for buildings and industry. In certain respects, South Africa is already well positioned for energy reform: it has huge solar and substantial wind energy potentials, a sophisticated, well-capitalized industrial sector, and hundreds of millions of aid dollars flowing in every year from North America and Europe. If South Africa reforms its energy economy from the ground up, it could catalyze a revolution across the entire continent.

Two nations atop two hundred years of coal

South Africa isn't a "developing country" in the usual sense - it is a rich nation and a poor one bound up together. The rich nation is mostly white and constitutes 14 percent of the country's 42.8 million people. The poor nation is mostly black, and accounts for three-quarters of the population. (The remainder make up the other two ethnic groups in the country's now defunct caste system: Indian and "colored" - people of mixed ethnic background.) In 1992, the most recent year for which figures were available, average per capita income was $9,109 for whites, about on a level with Portugal or South Korea. For blacks, the figure stood at $992, similar to Haiti or Mozambique. In that year, 90 percent of blacks had incomes below the average for the poorest fifth of the white population.

Apartheid has wired the race line directly into the country's circuitry. Eskom, the government-owned national electric utility, operates a power grid that spans the country and branches into several neighboring states. That grid reaches 98 percent of white households, but only 31 percent of black homes. In rural areas, only about 20 percent of blacks have electricity, yet virtually all whites do, because the apartheid regime saw the provision of electricity (and telephones) to whites as a "national security" measure.

The system is as wasteful as it is unfair, especially when it comes to industry. A relatively small share of the country's electricity goes to residential users; most of it is used for mining and the other heavy industries that dominate the economy. In 1994, the country's leading electricity users were mining (which accounted for 24 percent), residential (19 percent), steel making (14 percent), and the public and commercial sectors (13 percent collectively). In part, the heavy reliance on mining can be explained by geology: South Africa has an unusually high concentration of valuable minerals, such as manganese, chromium, and gold. Gold mining alone accounts for 28 percent of foreign revenues, and is the country's most profitable export. But beyond the geology, the focus on energy-intensive industries is a modern variation on an old theme. South Africa still has a "colonial economy" - an extractive, wasteful machine designed primarily to provide cheap raw material to its foreign customers.

The country's unique history has exacerbated the problem. Much of South Africa's economy developed in semi-isolated conditions, under international sanctions and protectionist tariffs. Cheap electricity and labor were the apartheid formula for industry. It's not surprising, then, that in terms of energy use, industry has a poor productivity level. In terms of per unit industrial output, the country's paper manufacturers consume 30 percent more energy than their western European counterparts. Its steel manufacturers use over 50 percent more energy than European steel makers. An overview of the resulting inefficiencies can be had by comparing total national energy use to gross domestic product (GDP). In 1993, South Africa used the equivalent of 0.666 tons of oil for every $1,000 in GDP that it earned. The corresponding figures for the United States were 0.431 tons of oil equivalent, and for the OECD, 0.344. (The values are in 1987 dollars, adjusted for purchasing power parity.) Some industries, like appliance manufacturing, have so low a level of productivity that they may not be viable after import tariffs are repealed, as mandated by the GATT (the General Agreement on Tariffs and Trade).

This level of waste is possible because of South Africa's enormous reserves of economically recoverable coal - enough, it has been estimated, to meet the country's energy needs for two centuries. The coal-rich province of Mpumalanga, east of...